Going Global: Exporting for Technology Firms

1
Going Global Exporting for Technology Firms

• Randi Bussin
• Trilogie Consultants
• www.trilogie.com

2
Defining a Small Technology Firm

• Typically software or Internet technology
• Financed by venture capital
• Senior management team in place
• Sales organization across US
• US market strategy is defined
• Increasing number of US references

3
Small Technology Firms Go Global

• The Internet breaks down barriers
• Pressure to be a global player early in stages of
  firms development
• Demand driven by potential customers
  distributors
• Going global puts intense pressure on a small
  firm
• Management team and financial pressure
• Potential high rewards if done correctly
• Firm with 1-10M revenues can expect 10 of sales
  from overseas (PWC Software Business Practices
  Survey)
• In Year 1 of global expansion, a tech start-up
  can derive 10-20 from global markets (Trilogies
  experience)

4
Yesterday versus Today

• Wang Computers-European Marketing 1982
• Only email within the company faxes to all
  outside audiences no Internet access
• New product announcements had less international
  impact
• Took 3-6 months to hit international press
• No Internet access for potential
  customers/distributors to research new products
• Less pressure for simultaneous release and
  localized versions
• International launches in large countries
  smaller countries were left out

5
Yesterday versus Today

• XYZ Software 2001
• Web site creates a global firm from day one
• Press releases carried on all wires worldwide
• 30-50 emails/week from potential customers,
  distributors and strategic partners
• Even smaller countries have research capabilities
  to find out about leading edge products
• Pressure to go global during very early stages
  of growth
• Limited internal resources with international
  experience
• Going global is NOT an option!
• When?
• How much to spend?

6
Going Global Three Options

• Do nothing
• Impact sales in US
• Competitors seize markets overseas
• Internal resources
• Find someone with previous international
  experience
• Limited contacts?
• Bandwidth issues impacting speed to market
• Hire outside consultant in field of international
  business
• Numerous contacts
• Ability to move quickly
• Cost issues

7
Exporting Challenges for a Small Firm

• Bandwidth issues
• Management team needs to understand global
  business planning and expansion
• Management team maxed out with raising funds, US
  expansion and potential international expansion
• Simultaneous juggling of international expansion
  with US growth
• Who will manage the expansion? outside resource
  may be required
• Global expansion impacts all departments within
  firm
• Communicate global strategy to all functional
  departments and adjust current work methods
• Financial Pressure
• How do you fund the international expansion? And
  how much will it cost?
• Do you need to include intl funding requirements
  in next round of funding?

8
Exporting Challenges for a Small Firm

• Recruiting and staffing complexities
• Need to hire immediately-who do you partner with?
  
• Finding good local talent to staff up
  operations
• Cultural differences

9
Benefits of Exporting

• Significant growth potential increase in
  revenues
• Enhances your firms image with the public
  investors
• Offsets variations in U.S. revenues
• Especially important in times of US recession
• Better positions your firms competitive
  intelligence
• Can extend the lifecycle of your product
• Management team expands its knowledge
  experience in global issues

10
Ideal Timing for Small Firm

• US Business strategy is defined
• Market, target customer and how to sell to them
• US sales team is built out
• Offices in most US cities
• Marketing programs to support sales
• Growing number of US references/installed base
• Assigned resource to manage global effort
• Commitment from senior management team

11
Keys to Success When exporting

• Research-Do your homework and due diligence
• Markets, local business culture and your
  distribution partners
• Research, build the business plan and then
  implement it!
• Dont try to expand into too many markets at
  once FOCUS!
• Dont just think act think short term
• Ex In Europe, customer relationships take longer
  to build
• Engage the senior management team and VCs in the
  planning process a top-down approach is crucial
• Communicate your international plan to all your
  employees and strategic partners a team approach
  is KEY
• Carefully assess your funding requirements
• Hire local talent and integrate them to the firm
• Visit them often in the beginning bond with your
  overseas teams
• Have realistic expectations with respect to
  revenues

12
Case study Local software firm

• Setting the stage
• Met all criteria for ideal timing
• Launch into European market
• Considering key markets only
• Use outside consulting resource
• Limited bandwidth and internal expertise
• Methodology
• Due diligence
• Research market potential and key markets
• Build business plan
• Multiple scenarios with different number of
  countries
• Build and tweak financial plan
• Model for set-up/operating costs corresponding
  revenues

13
Case study Local software firm

• Present business and financial plan to senior
  management team and VCs
• Gain consensus on moving forward
• Results
• One country launch to start
• UK
• Tweak the model
• Sales, business partners, marketing, hiring
• Launch second country 60-90 days later

14
Case study Local software firmClient Lessons
(US VP Worldwide Sales)

• Europe is like dealing with separate entities
  not homogenous like the US market
• UK is easiest market to set up in most like
  US-language, people and how business is done
• Germany-most difficult hard to gain critical
  mass, more risk adverse, less inclined to buy
  from startup
• Expensive to set up and run operations
• Ex To sell solution in France, need to have
  local sales, support and marketing resources (7
  people)
• Revenue challenge
• Revenues take longer to generate count 6 months
  for first sales
• Company does not have brand
• Selling in Europe is different

15
Case study Local software firmClient Lessons
(US VP Worldwide Sales

• People challenge
• How to find the right people and quickly
• Key person to set up Europe Need builder, not
  an executor
• Builder requires
• Lots of energy
• Wear lots of hats-demo product, sell, marketing
  HR
• Willingness to work long hours
• Can attract good people
• Trust is key can not run Europe from US
• Startup mentality not prevalent in all countries
  in Europe
• Conclusion
• Difficult but worthwhile
• International revenues today represent 20 of
  total longer term should increase to 35

16
Impact of September 11, 2001/Recession

• VC firms not investing at same rate
• Squeeze for cash to run operation
• Layoffs in domestic operations
• Firms afraid to send people overseas
• Can not run Europe from US
• Can not set up Europe without multiple trips
• Setting priorities
• Focus on basics and what is known US operations
  becomes top priority
• Dont venture into new markets
• Not good use of funds
• Slow return on investment
• Impact on international job openings
• US-based positions/overseas expansion openings

17
Career Track-From A to Z

• Selected an industry in growth
• High tech in the early 1980s
• Highlighted language skills up front
• Not enough alone, but big plus
• Seized opportunity to study live overseas
• Field-based positions to develop skills
• Sales and business development
• Paid my dues
• Worked 12 hour days

18
Useful Skills to Acquire

• Sales and business development
• Develops customer-focused mentality
• Not just a strategist know how to execute
• Ability to work with other cultures/mindsets
• Networking
• Jobs are who you know more than what you know
• Develop skills that are transferable to other
  industries
• Useful when there is industry downturn